According to the ProWein 2023 "Business Report", high prices and declining consumption are a source of concern for the wine industry in 2024. However, there is cautious optimism for the current year, with the hope that the peak inflation can be overcome and profitability can be restored.
Economic challenges, such as rising costs and declining household purchasing power, are major concerns for the wine industry. Companies are trying to reduce production costs and eliminate unprofitable wines, but this has led to a decrease in investment.
In 2023, the majority of companies increased prices, causing a decline in sales and negatively impacting balance sheets. Retailers report increased sales in the basic segment, while the mid-segment and premium wines have lost ground. This trend is expected to continue into 2024-2025, with growth expected in markets such as Scandinavia and the Netherlands.
The main cause of the decline in consumption is the decrease in consumer income, attention to health and preference for other alcoholic beverages. The wine industry is being called upon to capitalize on the health trend by promoting alcohol-free and low-alcohol wines.
Furthermore, the market is plagued by oversupply, with a decrease in bulk wine prices and an increase in production costs. To address this situation, manufacturers try to reduce production, often with state support.
Some companies aim to increase sales by positioning wine as an exclusive premium product, but this requires significant investments in marketing and increased profitability.
Finally, wine consumption in Italy has declined in recent years, with a 3.1% decrease in sales in 2023. This is partly due to changes in consumer tastes and competition from other alcoholic beverages.
The descent of red wines into Italian homes
In recent years, Italy has witnessed a significant decline in the consumption of red wines in Italian homes. This trend appears more marked than other types of wine, with an overall decrease of 15%. The data shows that denomination wines (-6%) and IGTs (-19%) have suffered the greatest declines, but the negative record is recorded among common wines, with a dramatic decrease of 22%. However, some denominations and products maintain a stable position or even grow slightly, such as the PDO Montepulciano d'Abruzzo (-2%), the Chianti (-3%), and the Rubicone Igt in the Sangiovese variant (7%).
Wine e-commerce is an unknown
E-commerce in the wine sector was characterized by an increase in orders during the lockdowns, but in the last two years it has suffered a decline of 21% compared to the peak in 2021. However, despite this decrease, e-commerce continues to be an important channel for purchasing wine, accounting for triple the sales compared to 2019. Online shoppers are willing to spend more for quality, with an average price per liter 61% higher than in-store purchases. Furthermore, e-commerce is particularly popular for purchasing DOP and IGT wines, accounting for 75% of total sales of still wines. Sparkling wines, in particular, are in high demand online, accounting for 22% of sales, compared to the average of 13%. Despite this, wine e-commerce represents only 1.5% of total sales in the food & beverage sector.
Wine consumption has collapsed in five years: -8%. Sparkling wines keep the sector afloat
Data from the Uiv-Ismea Observatory indicate that overall wine consumption in Italy has decreased by 8% in five years. This decline was more pronounced for red wines (-15%) and common wines (-17%), while white wines recorded growth of 3%, and rosé wines by as much as 17%. However, sparkling wines have played a key role in keeping the sector afloat, recording 19% growth in five years, thanks largely to the success of Prosecco, which has seen a 30% increase in this period.
Wine, vinegar and spirits are worth 1.5% of Italian GDP
The wine, vinegar and spirits industry is a sector of great importance for the Italian economy, generating an added value of 20.5 billion euros and employing more than 460,000 people across the country. These sectors represent a true heritage of Italian culture and history. With over 2,300 companies and 81,000 direct jobs, these industries have a direct turnover of 21.5 billion euros and contribute significantly to Italian exports with 10 billion euros. Furthermore, wine, vinegar and spirits generate 1.5% of Italy's GDP. Piedmont is a key player in this sector, with over a third of the national turnover and 31% of the workforce related to spirits. Veneto, on the other hand, contributes 9% of the national turnover and 11% of the workforce.
Increasing sales trend in wine shops: the favorite wines are Barolo, Brunello and Amarone.
The Vinarius Observatory, the Association of Italian Wine Shops, revealed that wine sales during the holiday season were particularly positive in 2023. 55% of wine shops reported an improvement in sales compared to the previous winter. Wine shops are confirmed as the preferred channel for purchasing high quality wines. The most requested Classic Method sparkling wines include Champagne, Franciacorta and Trento Doc. The most popular red wines during the holidays were Barolo, Brunello and Amarone, followed by Chianti Classico Docg. Expectations for spring and summer are positive, with 63% of wine merchants expecting sales to remain stable and 27% expecting further growth. These data reflect a growing consumer attention towards quality and a growing interest in the world of wine, with wine merchants playing an important role in guiding customer choices.
In conclusion, the wine industry in Italy and around the world faces economic challenges and changing consumer tastes in 2024. However, there is hope that a balance can be found through reducing costs and adapting to needs of the current and future market.
